Question

Categorize each of the following trends or relationships as suggesting either (a) a normal trend or relationship or (b) a fraud related trend or relationship:
1. The company reports consistent profits over several years, but cash flows are declining.
2. Operating cash flow is consistent with sales and net income.
3. The timeliness of accounts receivable collections declines, but credit policies are unchanged.
4. Operating cash flow is not significantly different from that of the prior year, and operations have been consistent across the two years.
5. Investment income is consistent with the level of and returns expected from investments.
6. There are unexpected declines in the petty cash account.



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  • CreatedSeptember 22, 2014
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